Rare Earths, China Tariffs, Digital Tug-of-War

Rare earths are the silent backbone of the digital age, and the numbers behind their global control and demand tell a story of strategic urgency and economic fragility.

Welcome to this bonus episode of, The Digital Revolution with Jim Kunkle, on this episode we’re going to talk about the high-stakes tug-of-war over rare earth minerals, and a battle shaping the future of technology, energy, and geopolitical influence. As of 2025, China controls nearly 90% of global rare earth refining capacity, including a near-monopoly on heavy rare earth elements like dysprosium and terbium, which are essential for high-performance magnets used in Electric Vehicle motors, wind turbines, and defense systems. This dominance is not just about mining: China’s vertically integrated supply chain spans from raw extraction to finished Neodymium-Iron-Boron magnets, producing over 300,000 tonnes annually, while the U.S. is targeting just 1,000 tonnes. That disparity is more than a statistic, it’s a strategic vulnerability.

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Transcript

Rare earths are the silent backbone of the digital age, and the numbers behind their global control and demand tell a story of strategic urgency and economic fragility.

Welcome to this bonus episode of, The Digital Revolution with Jim Kunkle, on this episode we’re going to talk about the high-stakes tug-of-war over rare earth minerals, and a battle shaping the future of technology, energy, and geopolitical influence. As of 2025, China controls nearly 90% of global rare earth refining capacity, including a near-monopoly on heavy rare earth elements like dysprosium and terbium, which are essential for high-performance magnets used in Electric Vehicle motors, wind turbines, and defense systems. This dominance is not just about mining: China’s vertically integrated supply chain spans from raw extraction to finished Neodymium-Iron-Boron magnets, producing over 300,000 tonnes annually, while the U.S. is targeting just 1,000 tonnes. That disparity is more than a statistic, it’s a strategic vulnerability.

Meanwhile, global demand for rare earths continues to surge. According to the International Energy Agency, rare earth demand grew by 8% in 2024, driven largely by energy applications such as electric vehicles, battery storage, and grid modernization. This growth parallels a broader trend across critical minerals, with lithium demand alone rising nearly 30% year-over-year. Yet despite this spike, investment momentum in rare earth exploration and development has slowed, with real growth in spending dropping to just 2% in 2024, adjusted for inflation. The result? A widening gap between strategic need and supply resilience. In this episode, we’ll unpack how tariffs, trade policy, and global competition are reshaping the rare earth landscape, and what it means for the digital revolution ahead.

What are Rare Earths & Why They Matter

Rare earth elements are a group of 17 chemically similar metals that play an outsized role in modern technology despite their obscure names and microscopic quantities. These include lanthanum, neodymium, dysprosium, and others, each with unique magnetic, luminescent, and electrochemical properties. They’re essential to the performance of high-tech devices like smartphones, electric vehicles, wind turbines, and advanced military systems. Neodymium, for example, is used to produce Neodymium-Iron-Boron magnets, the strongest permanent magnets available, which power everything from Electric Vehicle motors to drone rotors and MRI machines. Without rare earths, the digital infrastructure we rely on daily would grind to a halt.

What makes rare earths especially critical is not just their utility, but their strategic concentration. While these elements are relatively abundant in Earth’s crust, they’re rarely found in economically viable concentrations, and their extraction and refinement are environmentally complex. As I had mentioned earlier, China dominates the global rare earth supply chain, controlling nearly 90% of refining capacity and over 60% of mining output. This monopoly gives China immense leverage over industries that underpin the digital revolution, from clean energy to defense tech. Throughout this episode, you’ll understand how rare earths became the linchpin of global innovation, why their supply chain is so fragile, and what the latest tariff moves signal for the future of digital sovereignty.

China’s Tariff Strategy

China’s latest tariff strategy on rare earths is a calculated escalation in the global tech and trade war, one that flexes its dominance over critical mineral supply chains and tests the resilience of the Western World economies.

In October 2025, Beijing announced sweeping new restrictions on the export of rare earths, lithium batteries, and superhard materials, including controls on the overseas transfer of production technologies. These measures are not blanket bans, but rather a licensing regime that allows China to selectively approve exports based on national interest and intended use. The move was framed as a response to foreign misuse of Chinese-sourced materials for military applications, and as a lawful step to “safeguard world peace and regional stability”. But beneath the diplomatic language lies a strategic maneuver: by tightening its grip on rare earths, materials it mines and processes at scale, China is signaling its ability to act as a choke point in global manufacturing, especially in sectors like semiconductors, Electric Vehicles, and defense systems.

The timing of these controls is equally telling. They follow a series of U.S. trade measures targeting Chinese tech firms and chip exports, and come just weeks before a proposed summit between President Trump and President Xi Jinping. In retaliation, Trump announced a 100% tariff on Chinese goods starting November 1, alongside new export controls on critical software. This tit-for-tat escalation has rattled global markets, with tech stocks plunging and rare earth companies surging amid supply fears. China’s strategy reveals a long-term play: it’s not just defending its economic interests, but attempting to reshape the rules of global trade by leveraging its mineral monopoly. For digital infrastructure, clean energy, and national security, the implications are profound, and the urgency of Western countries to diversify supply chains has never been clearer.

Impact on Tech & Energy Sectors 

China’s rare earth export restrictions are sending shockwaves through the global tech and energy sectors, threatening to disrupt supply chains and inflate costs across industries that anchor the digital economy.

Rare earth elements like neodymium, dysprosium, and terbium are essential to manufacturing high-performance magnets, semiconductors, and battery components. These materials power everything from smartphones and laptops to electric vehicles, wind turbines, and precision-guided military systems. With China controlling roughly 90% of global rare earth processing capacity, its decision to expand export restrictions to 12 elements, including holmium, erbium, and ytterbium, has triggered immediate concern among manufacturers and governments worldwide. The new controls extend beyond raw materials to include mining technologies, smelting processes, and magnet production, effectively tightening China's grip on the entire value chain.

For tech companies, the impact is already visible. Semiconductor producers face delays and cost spikes as rare earths used in chip polishing and doping become harder to source. EV manufacturers are bracing for higher prices on Neodymium-Iron-Boron magnets, which are critical for motor efficiency and range. In the energy sector, wind turbine production is expected to slow, and solar panel costs may rise due to restricted access to rare earth phosphors and conductive materials. Analysts estimate that even partial enforcement of these tariffs could add 0.2 to 0.4 percentage points to U.S. inflation over the next two quarters. As firms scramble to diversify supply chains toward countries like Australia, Vietnam, and Canada, the transition will be costly and slow. This moment underscores a hard truth: the digital revolution’s momentum is tethered to mineral geopolitics, and resilience will require bold investment in domestic refining, recycling, and strategic stockpiling.

Global Response & Opportunities

Global reactions to China’s rare earth export controls have been swift, strategic, and increasingly collaborative, signaling a turning point in how nations approach mineral security and digital sovereignty.

In response to Beijing’s sweeping restrictions on rare earths and related technologies, the United States announced a 100% tariff on Chinese exports starting November 1, alongside new export controls on critical software. While China defended its actions as “legitimate” and aimed at preventing military misuse, the move rattled global markets and disrupted supply chain confidence. European and Japanese automakers have already suspended production due to rare earth shortages, and governments across the G7 are accelerating efforts to diversify sourcing and invest in domestic refining capacity. Australia, Canada, and Vietnam have emerged as key partners in this pivot, with new joint ventures and exploration projects gaining traction.

Beyond defense, this moment presents a rare opportunity for innovation. Countries are investing in rare earth recycling, substitution technologies, and closed-loop manufacturing systems to reduce dependency on Chinese supply chains. The European Union is fast-tracking its Critical Raw Materials Act, while the U.S. Department of Energy is funding magnet recycling pilots and rare earth separation facilities. India and South Korea are also ramping up bilateral agreements to secure access and build refining infrastructure. These efforts reflect a broader shift toward economic security as a pillar of digital transformation, where mineral independence becomes as vital as data sovereignty. For businesses and policymakers alike, the challenge is clear: build resilient, transparent, and sustainable supply chains that can weather geopolitical shocks and fuel the next wave of innovation.

Legacy Lens

The rare earths crisis isn’t just a flashpoint in trade policy, it’s a defining moment in the legacy of digital transformation. As nations scramble to secure supply chains and recalibrate industrial strategy, we’re witnessing a shift from reactive economics to proactive resilience. This moment echoes past inflection points: the oil shocks of the 1970’s, the semiconductor race of the 1990’s, and the global chip shortage of the early 2020’s. Each of those crises forced a reckoning with dependency, innovation, and sovereignty. Today, rare earths are the new frontier, where mineral access equals digital power, and strategic autonomy becomes a prerequisite for progress.

From a legacy-building perspective, this is where leadership matters most. The decisions made now, whether to invest in domestic refining, fund recycling technologies, or forge new alliances, will shape not just supply chains, but the values embedded in our digital infrastructure. Will we prioritize sustainability over speed? Collaboration over control? Transparency over expedience? For educators, entrepreneurs, and policymakers, rare earths offer a teachable moment: a chance to reframe digital transformation as a systems challenge, not just a tech upgrade. And for those building brands, businesses, or nations, the legacy lens reminds us that resilience isn’t just about surviving disruption, it’s about designing systems that thrive through it.

Thank You for listening to this bonus episode of, The Digital Revolution with Jim Kunkle: I hope you enjoyed today’s digital transformation topic and found this episode both insightful and thought-provoking. Your continued support means the world to us, it’s what keeps this podcast thriving and evolving. 

Thank you for being part of the Digital Revolution community and for joining the series on this journey through the ever-changing world of digital innovation and revolution. Until next time, stay curious, stay inspired, and, as always, keep pushing the boundaries of what’s possible!

The Digital Revolution with Jim Kunkle - 2025